Question

In: Accounting

The following selected transactions were taken from the books of Ripley Company for Year 1: On...

The following selected transactions were taken from the books of Ripley Company for Year 1:
On February 1, Year 1, borrowed $47,000 cash from the local bank. The note had a 5 percent interest rate and was due on June 1, Year 1.

Cash sales for the year amounted to $245,000 plus sales tax at the rate of 6 percent.

Ripley provides a 90-day warranty on the merchandise sold. The warranty expense is estimated to be 4 percent of sales.

Paid the sales tax to the state sales tax agency on $180,000 of the sales.

Paid the note due on June 1 and the related interest.

On November 1, Year 1, borrowed $47,000 cash from the local bank. The note had a 9 percent interest rate and a one-year term to maturity.

Paid $3,700 in warranty repairs.

A customer has filed a lawsuit against Ripley for $130,000 for breach of contract. The company attorney does not believe the suit has merit.

Interest Payable Sales Tax Payable
Beg. Bal. Beg. Bal.
End. Bal. End. Bal.
Warranty Payable Notes Payable
Beg. Bal. Beg. Bal.
End. Bal. End. Bal.


Prepare the current liabilities section of the balance sheet at December 31, Year 1. (Round your answers nearest dollar amount.

RIPLEY COMPANY
Balance Sheet (partial)
As of December 31, Year 1
Current liabilities
Total current liabilities

Solutions

Expert Solution

Interest Payable Sales Tax Payable
Beg. Bal. 0 Beg. Bal. 0
705 6 14700 2
4 10800
End. Bal. 705 End. Bal. 3900
$47000 x 9% x 2/12 = $705 $245000 x 6% = $14700
$180000 x 6% = $10800
Warranty Payable Notes Payable
Beg. Bal. 0 Beg. Bal. 0
9800 3 47000 1
7 3700 5 47000 47000 6
End. Bal. 6100 End. Bal. 47000
$245000 x 4% = $9800

Note: Kindly re-confirm transaction numbers given in the t-accounts since the transactions provided in the question have not been numbered.

RIPLEY COMPANY
Balance Sheet (Partial)
As of December 31, Year 1
Current Liabilities
Interest payable 705
Sales tax payable 3900
Warranty payable 6100
Notes payable 47000
Total Current Liabilities 57705

The lawsuit filed against Ripley by a customer for $130000 for breach of contract should not be recorded since it is a contingent liability with probability of its occurrence being remote as the attorney believes the suit does not have merit.


Related Solutions

The following selected transactions were taken from the books of Ripley Company for Year 1: On...
The following selected transactions were taken from the books of Ripley Company for Year 1: On February 1, Year 1, borrowed $45,000 cash from the local bank. The note had a 7 percent interest rate and was due on June 1, Year 1. Cash sales for the year amounted to $235,000 plus sales tax at the rate of 8 percent. Ripley provides a 90-day warranty on the merchandise sold. The warranty expense is estimated to be 4 percent of sales....
The following selected transactions were taken from the books of Ripley Company for Year 1: On...
The following selected transactions were taken from the books of Ripley Company for Year 1: On February 1, Year 1, borrowed $46,000 cash from the local bank. The note had a 6 percent interest rate and was due on June 1, Year 1. Cash sales for the year amounted to $245,000 plus sales tax at the rate of 7 percent. Ripley provides a 90-day warranty on the merchandise sold. The warranty expense is estimated to be 2 percent of sales....
The following selected transactions were taken from the books of Ripley Company for Year 1: On...
The following selected transactions were taken from the books of Ripley Company for Year 1: On February 1, Year 1, borrowed $50,000 cash from the local bank. The note had a 8 percent interest rate and was due on June 1, Year 1. Cash sales for the year amounted to $235,000 plus sales tax at the rate of 7 percent. Ripley provides a 90-day warranty on the merchandise sold. The warranty expense is estimated to be 3 percent of sales....
The following selected transactions were taken from the books of Ripley Company for 2016:    1....
The following selected transactions were taken from the books of Ripley Company for 2016:    1. On February 1, 2016, borrowed $58,000 cash from the local bank. The note had a 5 percent interest rate and was due on June 1, 2016. 2. Cash sales for the year amounted to $225,000 plus sales tax at the rate of 6 percent. 3. Ripley provides a 90-day warranty on the merchandise sold. The warranty expense is estimated to be 2 percent of...
The following selected transactions were taken from the books of Ripley Company for 2018: 1.   On...
The following selected transactions were taken from the books of Ripley Company for 2018: 1.   On February 1, 2018, borrowed $70,000 cash from the local bank. The note had a 6 percent interest rate and was due on June 1, 2018. 2.   Cash sales for the year amounted to $240,000 plus sales tax at the rate of 7 percent. 3.   Ripley provides a 90-day warranty on the merchandise sold. The warranty expense is estimated to be 1 percent of sales....
The following selected transactions were taken from the records of Shipway Company for the first year...
The following selected transactions were taken from the records of Shipway Company for the first year of its operations ending December 31: Apr. 13. Wrote off account of Dean Sheppard, $4,040. May 15. Received $2,020 as partial payment on the $5,370 account of Dan Pyle. Wrote off the remaining balance as uncollectible. July 27. Received $4,040 from Dean Sheppard, whose account had been written off on April 13. Reinstated the account and recorded the cash receipt. Dec. 31. Wrote off...
The following selected transactions were taken from the records of Shipway Company for the first year...
The following selected transactions were taken from the records of Shipway Company for the first year of its operations ending December 31: Apr. 13. Wrote off account of Dean Sheppard, $8,030. May 15. Received $500 as partial payment on the $7,430 account of Dan Pyle. Wrote off the remaining balance as uncollectible. July 27. Received $8,030 from Dean Sheppard, whose account had been written off on April 13. Reinstated the account and recorded the cash receipt. Dec. 31. Wrote off...
The following selected transactions were taken from the records of Shipway Company for the first year...
The following selected transactions were taken from the records of Shipway Company for the first year of its operations ending December 31: Apr. 13. Wrote off account of Dean Sheppard, $8,450. May 15. Received $500 as partial payment on the $7,100 account of Dan Pyle. Wrote off the remaining balance as uncollectible. July 27. Received $8,450 from Dean Sheppard, whose account had been written off on April 13. Reinstated the account and recorded the cash receipt. Dec. 31. Wrote off...
The following selected transactions were taken from the records of Shipway Company for the first year...
The following selected transactions were taken from the records of Shipway Company for the first year of its operations ending December 31: Apr. 13 Wrote off account of Dean Sheppard, $5,190. May 15 Received $2,600 as partial payment on the $6,900 account of Dan Pyle. Wrote off the remaining balance as uncollectible. July 27 Received $5,190 from Dean Sheppard, whose account had been written off on April 13. Reinstated the account and recorded the cash receipt. Dec. 31 Wrote off...
The following were taken from the books of Marvin Company. The company uses the FIFO method...
The following were taken from the books of Marvin Company. The company uses the FIFO method for costing inventories. January 1 March 31 Raw materials Work in process Finished goods P 268,000 0 43,000 (100 units) P 167,000 0 ? (200 units) Raw materials purchased Direct labor Factory overhead Sales P 1,946,700 2,125,800 764,000 12,400 units @ P535 8.The number of units manufactured is a. 11,900 b. 12,000 c. 12,500 d. 15,200 9. Refer to No. 8. The cost of...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT